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France Signals Willingness to Delay Tariffs on UK-EU Electric Vehicle Sales
France has indicated that it is open to postponing the introduction of tariffs on electric vehicle (EV) sales between the UK and EU. This development removes a significant obstacle to reaching a new deal concerning the levy, which was set to take effect in January.
French trade minister Olivier Becht, in an interview with the Financial Times, expressed his country’s desire for a resolution. France had been the sole major voice of opposition within the bloc to the UK’s request for a delay on the 10% duty imposed on EV sales.
Becht stated, “I hope that we can find a solution in the coming weeks,” and added that Paris was receptive to ideas related to deferring the tariffs before December 31. Recognizing the UK as the primary European market for EV production, Becht emphasized the importance of preserving incentives for battery investments.
Tariffs on EVs Shipped Across the Channel
As per the post-Brexit Trade and Cooperation Agreement (TCA), a tariff of 10% would be imposed on EVs transported across the English Channel if they incorporated batteries predominantly manufactured outside Europe or the UK.
Challenges Faced by the UK and EU Car Industries
Both the UK and EU car industries have raised concerns regarding Europe’s inadequate domestic battery-making capacity to meet the TCA’s rules of origin threshold. They argue that these tariffs would incur significant costs and dampen demand.
Germany and other member states support the UK’s request for a three-year delay on the levy. They believe that imposing higher prices on EU-made electric cars would primarily benefit Chinese companies, which already pay the tariffs.
France’s Position and Proposed Alternative
Among the EU member states, France, with a substantial car industry, opposed the blanket extension of the levy at a recent meeting in Brussels, according to an EU diplomat familiar with the discussion.
Paris expressed concerns that modifying the TCA’s terms risked establishing a precedent that could be exploited by the UK to seek further changes to the agreement, which has already impacted EU-UK trade ties since its implementation in January 2021.
Instead of reopening the TCA, France urged the European Commission to address the concerns of EU carmakers without making substantial revisions. It argued that a significant portion of the EU industry could meet the agreement’s terms within a few months, a sentiment shared by Becht.
Commission’s Considerations and Industry Response
The European Commission is currently evaluating possible amendments to the trade rules. However, it is cautious about undermining incentives for the car industry to invest in EU battery supply chains, according to officials.
The European Automobile Manufacturers’ Association emphasized that “patchwork solutions” to the tariff dispute were inadequate. It called for a three-year extension – no less – to the current rules of origin to preserve the competitiveness of Europe’s EV manufacturing sector.
Commission Vice-President Maroš Šefčovič pledged to seek solutions that enjoy support from all member states.
The potential delay in introducing tariffs on UK-EU electric vehicle sales signifies a positive development in ongoing trade negotiations. France’s willingness to resolve this issue could pave the way for a new deal and alleviate concerns raised by the UK and EU car industries. As discussions continue, all parties involved are seeking a solution that balances the promotion of domestic manufacturing and investment while maintaining a competitive landscape for electric vehicle production in Europe.